Consultants battle for thought leadership in digital transformation

19 December 2017

New data has revealed how major consulting firms are embracing and using digital transformation in their offerings. Analysis shows that a battle is raging between top consultancies to win the race for lucrative digital transformation work.

Technology is disrupting every industry, with new competitors pushing established market incumbents to invest huge sums in digital transformation strategies, as they attempt to minimise their loss of market share. As these clients turn to consultants, digital transformation consulting is booming. The digital transformation consulting market is worth $23 billion today, and represents more than 15% of the entire consultancy industry globally. To win as large a slice of this pie as possible, consultancies are increasingly trying to position themselves as experts on digital transformation.

Digital transformation

A new analysis by Waymark Tech, a small tech firm based in Thame, Oxfordshire, shows that eight large consultancies have upped their use of the term ‘digital transformation’ by 513% since 2014, with the majority of this uptick taking place between 2016 and 2017. The researchers took this data from how many times the consulting firms had mentioned the term ‘digital transformation’ in their online literature, believing that this gave the best proxy to conclude who is positioning themselves most effectively and aggressively in the marketplace.

“Given the booming demand for digital services, it is no surprise that research shows that the major global consultancies have changed the language on their websites and in their reports to focus on digital transformation,” said Mark Holmes, CEO and founder of Waymark Tech.Number of digital mentions by eight leading consulting firmsThe consulting firms taken under scrutiny were: Accenture, Bain & Co., Booz Allen, Deloitte, EY, KPMG, McKinsey & Company, PwC, which represent seven of the globe’s 10 largest consulting firms. Bain is only player studied here that is not placed in the world’s top 10, based on data from Gartner, although the firm follows closely after.

Analysis reveals that from a relatively modest starting position of fewer than 500 mentions, ‘digital transformation’ doubled by 2015 to around 1,000 mentions – plateauing for a year, before being forecast to have hit over 2,000 mentions by the end of the year. It’s leap in popularity is only surpassed by FinTech, as a rising theme, with the new financial technology coming into vogue around the same time, although it is currently expected to surpass 2,500 mentions by the end of 2017. The eight firms analysed are considerably less excitable surrounding RegTech, with the regulatory technology standing to hit around 1,000 mentions, at the most modest growth rate of three concepts considered by Waymark.

According to the firm’s analysis, Big Four firm KPMG are far and away the most consistent with their mentioning of digital transformation. The professional services giants used the term 604 times, according to Waymark’s data, more than any other firm.

Accenture and PwC also utilised the term regularly, at 453 and 435 times each. Booz Allen, the consultancy with the smallest revenue under study, was also the firm which mentioned the concept least. However, the authors highlighted that they are playing catchup, ramping up messaging around transformation significantly during the second half of this year.Number of ‘digital transformation’ mentions by consulting firms

FinTech and RegTech

The researchers performed the same analysis for two other major buzzwords in digital domain: ‘FinTech’ and ‘RegTech’, finding that mentions for ‘FinTech’ and ‘RegTech’ were up 397% and 446% respectively.

Much of the discussion among consultancies around digital transformation has focused on FinTech advisory. This is not a surprise, given estimates that financial services constitute more than a quarter (26%) of the global consulting industry. According to the analysis, this has also been reflected in consultancies’ websites. The term ‘FinTech’ is now being used nearly 400% more frequently than just three years ago.

While KPMG also topped the list overall with research showing it hit more than 620 mentions this year, the firm is forecast to forfeit its leading position to Deloitte over the coming year. Accenture, Deloitte and EY all recorded over 400 forecast mentions of the terms on their websites, as did PwC, which launched its own Global FinTech Report this year, alongside rival KPMG, which launched its own Pulse of Fintech report. The position of ‘thought leaders’ is increasingly coveted by consulting firms looking to differentiate their output from the host of competitors also vying for lucrative digital work – and the Big Four of KPMG, EY, PwC and Deloitte seem to excel at this, dominating rankings of best FinTech and InsurTech reports, recently.

By contrast, McKinsey & Company, Bain & Co, and Booz Allen have all chosen not to position themselves as aggressively so far, with less than 100 mentions each.Number of FinTech and RegTech mention by consultancies

The market for RegTech is smaller but also a field of huge promise for consultants, particularly thanks to the approach of the major GDPR legislation. For financial institutions, the cost of compliance has already risen dramatically in recent times, due to a whole raft of new and substantial regulations such as MiFID in the EU. In this rapidly changing environment, banks have been on the lookout for external advice to leverage technology to manage the rising tide of regulatory costs. RegTech can help them improve this.

RegTech is emerging as a growth advisory area for consultancies Although RegTech was less well known than FinTech, awareness has risen dramatically over the last year. Across the consultancies that we studied, RegTech was mentioned 221 times online and in collateral by consultancies in 2014, against 559 mentions of FinTech in the same year. Use of the term RegTech has now risen nearly 450% over the last four years, with mentions expected to top out at 1,000 by the end of this year.

Volume versus quality

Ultimately, it is hard to tell just what implications the usage of the terms have regarding the quality of services provided. While a heavier emphasis on digital transformation might indicate that the concept is at the front of a consultancy’s mind and values, their marketing output is entirely about what they think will best reach clients in the end. In terms of how effective the use of these terms have been in achieving that, it is also far from conclusive. For instance, while McKinsey’s latest study on impact of the automation on jobs – which found that up to one fifth of the global work force will be affected by global automation – was a major piece of thought leadership that gained global attention, helping reach clients beyond the firm’s usual avenues, a number of similar studies from the Big Four have failed to gain the eminence they had hoped for.

One reason for this may be that quality, rather than quantity, is the key to fame in thought leadership. There are analyst firms that track the quality of thought leadership, such as the Think Tanks and Civil Societies Program, which evaluates the standards of research. It found that McKinsey is #1 globally. They were followed by A.T. Kearney and EY, the only member of the Big Four to grace the top ten. More specific to consulting industry, Source Global Research has its own quality metric, although it does not feature a granular breakdown. So, for now, assessing the quality of such work beyond arbitrary rankings remains difficult.

Going forward, Mark Holmes said that irrespective of the volume versus quality discussion, digital transformation will become more and more important. As markets become bigger and draw more attention, space for digital transformation attention will be crowded and competitive. “Consultancies increasingly want to grow their revenue and position themselves effectively to take advantage of this growing source of work. With the market expected to boom this is understandable,” he concluded.

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Accenture's push into the creative sector is an identity crisis

18 April 2019

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.